FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


(X)              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1997

                                       OR

( )              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                       For the transition period from to


                             Commission file number
                                     0-21558


                            CNL Income Fund XII, Ltd.
             (Exact name of registrant as specified in its charter)


           Florida                                    59-3078856
    (State or other juris-                         (I.R.S. Employer
   diction of incorporation                       Identification No.)
      or organization)


400 E. South Street, #500
Orlando, Florida                                         32801
   (Address of principal                              (Zip Code)
     executive offices)


Registrant's telephone number
   (including area code)                            (407) 422-1574


Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.   Yes     X      No


<PAGE>









                                    CONTENTS






Part I                                                      Page

  Item 1.  Financial Statements:

             Condensed Balance Sheets                       1

             Condensed Statements of Income                 2

             Condensed Statements of Partners' Capital      3

             Condensed Statements of Cash Flows             4

             Notes to Condensed Financial Statements        5

  Item 2.  Management's Discussion and Analysis
             of Financial Condition and
             Results of Operations                          6-9


Part II

  Other Information                                         10


<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                            CONDENSED BALANCE SHEETS


                                         September 30,              December 31,
            ASSETS                           1997                       1996
                                         -------------              -----------

Land and buildings on operating
  leases, less accumulated
  depreciation of $1,381,329 and
  $1,143,698                               $20,899,837             $21,082,468
Net investment in direct financing
  leases                                    13,691,013              13,789,036
Investment in joint ventures                 2,513,530               2,496,749
Cash and cash equivalents                    1,812,974               1,800,601
Receivables, less allowance for
  doubtful accounts of $28,360 and
  $23,395                                      190,357                 202,908
Prepaid expenses                                12,589                   6,786
Organization costs, less accumulated
  amortization of $9,965 and $8,465                 35                   1,535
Lease costs, less accumulated
  amortization of $879 for 1997                 23,173                      -
Accrued rental income                        2,364,793               1,963,055
                                           -----------             -----------

                                           $41,508,301             $41,343,138
                                           ===========             ===========


LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                           $     7,374             $     9,303
Accrued and escrowed real
  estate taxes payable                          18,682                  14,706
Distributions payable                          956,252                 956,252
Due to related parties                          10,303                   2,981
Rents paid in advance                          152,928                  69,790
                                           -----------             -----------
    Total liabilities                        1,145,539               1,053,032

Partners' capital                           40,362,762              40,290,106
                                           -----------             -----------

                                           $41,508,301             $41,343,138
                                           ===========             ===========



            See accompanying notes to condensed financial statements.

                                        1

<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>


                                                            Quarter Ended                    Nine Months Ended
                                                            September 30,                     September 30,
                                                     1997             1996               1997              1996
                                                  ----------       ----------         ----------        ----------
<S> <C>
Revenues:
  Rental income from
    operating leases                              $  621,234       $  607,197         $1,829,206        $1,867,682
  Earned income from direct
    financing leases                                 409,932          415,545          1,231,855         1,274,730
  Contingent rental income                            11,036           15,586             36,999            37,804
  Interest and other income                           18,420           21,037             59,394            99,560
                                                  ----------       ----------         ----------        ----------
                                                   1,060,622        1,059,365          3,157,454         3,279,776
                                                  ----------       ----------         ----------        ----------

Expenses:
  General operating and
    administrative                                    38,390           44,014            119,166           134,228
  Professional services                                6,837           11,615             18,999            27,547
  Management fees to
    related parties                                   10,041            9,431             30,005            29,518
  Real estate taxes                                      542            1,521              1,952             7,327
  State and other taxes                                   -                -              18,496            18,472
  Depreciation and
    amortization                                      80,459           79,271            240,010           235,691
                                                  ----------       ----------         ----------        ----------
                                                     136,269          145,852            428,628           452,783
                                                  ----------       ----------         ----------        ----------

Income Before Equity in
  Earnings of Joint
  Ventures and Loss on
  Sale of Land and Building                          924,353          913,513          2,728,826         2,826,993

Equity in Earnings of
  Joint Ventures                                      71,230           74,806            212,586           130,103

Loss on Sale of Land and
  Building                                                -                -                  -            (15,355)
                                                  ----------       ----------         ----------        ----------

Net Income                                        $  995,583       $  988,319         $2,941,412        $2,941,741
                                                  ==========       ==========         ==========        ==========

Allocation of Net Income:
  General partners                                $    9,956       $    9,883         $   29,414        $   29,520
  Limited partners                                   985,627          978,436          2,911,998         2,912,221
                                                  ----------       ----------         ----------        ----------

                                                  $  995,583       $  988,319         $2,941,412        $2,941,741
                                                  ==========       ==========         ==========        ==========

Net Income Per Limited
  Partner Unit                                    $     0.22       $     0.22         $     0.65        $     0.65
                                                  ==========       ==========         ==========        ==========

Weighted Average Number
  of Limited Partner
  Units Outstanding                                4,500,000        4,500,000          4,500,000         4,500,000
                                                  ==========       ==========         ==========        ==========
</TABLE>










            See accompanying notes to condensed financial statements.

                                        2

<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                    CONDENSED STATEMENTS OF PARTNERS' CAPITAL


                                       Nine Months Ended          Year Ended
                                         September 30,           December 31,
                                              1997                   1996
                                       -----------------         ------------

General partners:
  Beginning balance                      $   152,889            $   113,356
  Net income                                  29,414                 39,533
                                         -----------            -----------
                                             182,303                152,889
                                         -----------            -----------

Limited partners:
  Beginning balance                       40,137,217             40,058,715
  Net income                               2,911,998              3,903,510
  Distributions ($0.64 and $0.85
    per limited partner unit,
    respectively)                         (2,868,756)            (3,825,008)
                                         -----------            -----------
                                          40,180,459             40,137,217
                                         -----------            -----------

Total partners' capital                  $40,362,762            $40,290,106
                                         ===========            ===========




            See accompanying notes to condensed financial statements.

                                        3

<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS

                                                    Nine Months Ended
                                                      September 30,
                                                 1997              1996
                                             -----------        -----------

Increase (Decrease) in Cash and Cash
  Equivalents:

    Net Cash Provided by Operating
      Activities                             $ 2,955,295        $ 3,010,795
                                             -----------        -----------

    Cash Flows From Investing
      Activities:
        Proceeds from sale of land and
          building                                    -           1,640,000
        Additions to land and building
          on operating leases                    (55,000)                -
        Investment in joint venture                   -          (1,645,024)
        Collections on loan to tenant
          of joint venture                         4,886              5,733
        Payment of lease costs                   (24,052)                -
                                             -----------        -----------
            Net cash provided by (used
              in) investing activities           (74,166)               709
                                             -----------        -----------

    Cash Flows From Financing
      Activities:
        Distributions to limited
          partners                            (2,868,756)        (2,913,756)
                                             -----------        -----------
            Net cash used in
              financing activities            (2,868,756)        (2,913,756)
                                             -----------        -----------

Net Increase in Cash and Cash
  Equivalents                                     12,373             97,748

Cash and Cash Equivalents at
  Beginning of Period                          1,800,601          1,716,203
                                             -----------        -----------

Cash and Cash Equivalents at End of
  Period                                     $ 1,812,974        $ 1,813,951
                                             ===========        ===========

Supplemental Schedule of Non-Cash
  Financing Activities:

    Distributions declared and unpaid
      at end of period                       $   956,252        $   956,252
                                             ===========        ===========







            See accompanying notes to condensed financial statements.

                                        4

<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 1997 and 1996


1.       Basis of Presentation:

         The accompanying  unaudited  condensed  financial  statements have been
         prepared in accordance  with the  instructions  to Form 10-Q and do not
         include  all  of the  information  and  note  disclosures  required  by
         generally  accepted  accounting  principles.  The financial  statements
         reflect all adjustments,  consisting of normal  recurring  adjustments,
         which are, in the opinion of management,  necessary to a fair statement
         of the results for the interim periods presented. Operating results for
         the  quarter and nine  months  ended  September  30,  1997,  may not be
         indicative  of the  results  that may be  expected  for the year ending
         December  31, 1997.  Amounts as of December  31, 1996,  included in the
         financial   statements,   have  been  derived  from  audited  financial
         statements as of that date.

         These unaudited financial statements should be read in conjunction with
         the financial statements and notes thereto included in Form 10-K of CNL
         Income Fund XII, Ltd. (the  "Partnership")  for the year ended December
         31, 1996.

                                        5

<PAGE>



ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

         CNL Income Fund XII,  Ltd.  (the  "Partnership")  is a Florida  limited
partnership  that was organized on August 20, 1991, to acquire for cash,  either
directly or through  joint  venture  arrangements,  both newly  constructed  and
existing  restaurants,  as well as properties upon which  restaurants were to be
constructed  (the  "Properties"),  which are leased  primarily  to  operators of
national and regional  fast-food and family-style  restaurant chains. The leases
are triple-net  leases,  with the lessees generally  responsible for all repairs
and maintenance,  property taxes,  insurance and utilities.  As of September 30,
1997,  the  Partnership  owned  48  Properties,   including  interests  in  four
Properties owned by joint ventures in which the Partnership is a co-venturer.

Liquidity and Capital Resources

         The  Partnership's  primary source of capital for the nine months ended
September  30, 1997 and 1996,  was cash from  operations  (which  includes  cash
received from tenants, distributions from joint ventures, and interest and other
income  received,  less  cash  paid for  expenses).  Cash  from  operations  was
$2,955,295 and $3,010,795 for the nine months ended September 30, 1997 and 1996,
respectively.  The  decrease in cash from  operations  for the nine months ended
September 30, 1997, as compared to the nine months ended  September 30, 1996, is
primarily a result of changes in income and expenses as discussed in "Results of
Operations" below and changes in the Partnership's working capital.

         Other  sources and uses of capital  included the  following  during the
nine months ended September 30, 1997.

         In  March  1997,  the  Partnership  entered  into a new  lease  for the
Property in Tempe,  Arizona. In connection  therewith,  the Partnership incurred
$55,000 in renovation costs during the nine months ended September 30, 1997. The
renovations were completed in May 1997.

         Currently,  rental income from the Partnership's Properties is invested
in money market accounts or other short-term,  highly liquid investments pending
the  Partnership's  use of such  funds to pay  Partnership  expenses  or to make
distributions  to the  partners.  At September  30, 1997,  the  Partnership  had
$1,812,974 invested in such short-term investments, as compared to $1,800,601 at
December 31, 1996. The funds  remaining at September 30, 1997,  after payment of
distributions  and  other  liabilities,  will be used to meet the  Partnership's
working capital and other needs.

         Total  liabilities  of  the  Partnership  increased  to  $1,145,539  at
September  30, 1997,  from  $1,053,032  at December  31, 1996,  primarily as the
result of an  increase  in rents paid in advance  during the nine  months  ended
September  30,  1997.  The general  partners  believe that the  Partnership  has
sufficient cash on hand to meet its current working capital needs.


                                        6

<PAGE>



Liquidity and Capital Resources - Continued

         Based on cash from operations,  the Partnership declared  distributions
to the  limited  partners  of  $2,868,756  for  each of the  nine  months  ended
September 30, 1997 and 1996 ($956,252 for each of the quarters  ended  September
30, 1997 and 1996).  This  represents  distributions  for each  applicable  nine
months  of $0.64  per unit  ($0.21  per unit for each  applicable  quarter).  No
distributions were made to the general partners for the quarters and nine months
ended  September 30, 1997 and 1996. No amounts  distributed or to be distributed
to the limited  partners for the nine months ended  September 30, 1997 and 1996,
are  required  to be or have  been  treated  by the  Partnership  as a return of
capital  for  purposes of  calculating  the  limited  partners'  return on their
adjusted  capital  contributions.  The  Partnership  intends to continue to make
distributions  of cash available for  distribution to the limited  partners on a
quarterly basis.

         The Partnership's  investment strategy of acquiring Properties for cash
and  leasing  them under  triple-net  leases to  operators  who  generally  meet
specified financial  standards  minimizes the Partnership's  operating expenses.
The general partners believe that the leases will continue to generate cash flow
in excess of operating expenses.

         The general  partners have the right,  but not the obligation,  to make
additional capital  contributions if they deem it appropriate in connection with
the operations of the Partnership.

Results of Operations

         During the nine months ended September 30, 1996, the Partnership  owned
and leased 45 wholly owned Properties (including one Property in Houston, Texas,
which was sold in April 1996) and during the nine  months  ended  September  30,
1997, the Partnership  owned and leased 44 wholly owned  Properties to operators
of fast-food and family-style restaurant chains. In connection therewith, during
the nine months  ended  September  30,  1997 and 1996,  the  Partnership  earned
$3,061,061 and $3,142,412,  respectively, in rental income from operating leases
and earned income from direct financing leases from these Properties, $1,031,166
and $1,022,742 of which was earned during the quarters ended  September 30, 1997
and 1996, respectively. The decrease in rental and earned income during the nine
months ended  September 30, 1997, as compared to the nine months ended September
30,  1996,  is partially  attributable  to a decrease of  approximately  $51,800
during the nine months ended  September 30, 1997, as a result of the sale of the
Property in Houston,  Texas, in April 1996. The  Partnership  reinvested the net
sales  proceeds from the sale of the Property in Houston,  Texas,  in Middleburg
Joint Venture in May 1996.

         Rental and earned  income also  decreased  during the nine months ended
September  30, 1997, by  approximately  $13,300 as a result of the fact that the
tenant of the  Property  in  Tempe,  Arizona,  declared  bankruptcy  and  ceased
operations of the restaurant  business  located on the Property in June 1996. In
March 1997, the

                                        7

<PAGE>



Results of Operations - Continued

Partnership  entered into a new lease for the Property in Tempe,  Arizona with a
new tenant to operate the Property for which rental  payments  commenced in July
1997. Consequently, the Partnership expects rental and earned income to increase
during the remainder of 1997 and in subsequent years.

         For the nine months ended  September 30, 1997 and 1996, the Partnership
also earned  $36,999 and $37,804,  respectively,  in contingent  rental  income,
$11,036 and $15,586 of which was earned during the quarters ended  September 30,
1997 and 1996, respectively.

         Interest  and other  income was $59,394 and $99,560 for the nine months
ended  September 30, 1997 and 1996,  respectively,  of which $18,420 and $21,037
was earned for the quarters ended September 30, 1997 and 1996, respectively. The
decrease  in  interest  and  other  income  is  primarily  attributable  to  the
Partnership  granting  certain  easement  rights  to the  owner of the  Property
adjacent to the  Partnership's  Property in Black Mountain,  North Carolina,  in
exchange for $25,000 during the nine months ended September 30, 1996.

         For the nine months ended  September 30, 1997 and 1996, the Partnership
owned and leased four Properties  indirectly through joint venture arrangements.
In  connection  therewith,  during the nine months ended  September 30, 1997 and
1996, the Partnership earned $212,586 and $130,103,  respectively,  attributable
to net income earned by these joint  ventures,  $71,230 and $74,806 of which was
earned during the quarters ended September 30, 1997 and 1996, respectively.  The
increase in net income  earned by joint  ventures  during the nine months  ended
September 30, 1997, as compared to the nine months ended  September 30, 1996, is
primarily  due to the fact that the  Partnership  invested in  Middleburg  Joint
Venture in May 1996.

         Operating expenses,  including  depreciation and amortization  expense,
were  $428,628 and $452,783  for the nine months  ended  September  30, 1997 and
1996, respectively, of which $136,269 and $145,852 was incurred for the quarters
ended  September  30, 1997 and 1996,  respectively.  The  decrease in  operating
expenses  during the  quarter and nine  months  ended  September  30,  1997,  as
compared to the quarter and nine months ended  September  30, 1996, is partially
attributable to a decrease in accounting and administrative  expenses associated
with operating the Partnership and its Properties.

         Operating  expenses also  decreased  during the quarter and nine months
ended  September  30, 1997,  as a result of the fact that during the quarter and
nine months ended September 30, 1996, the Partnership  recorded current and past
due real  estate  taxes  and  certain  expenses  associated  with  the  tenant's
bankruptcy, relating

                                        8

<PAGE>



Results of Operations - Continued

to the  Property  in Tempe,  Arizona.  The  decrease is  partially  offset by an
increase  in  depreciation  expense as a result of the  reclassification  of the
lease  from a direct  financing  lease to an  operating  lease,  during the nine
months ended  September  30, 1996, as a result of the  termination  of the lease
with the former tenant as described above.

         As a result of the sale of the  Property  in Houston,  Texas,  in April
1996,  the  Partnership  recognized  a loss of $15,355 for  financial  reporting
purposes for the nine months ended  September 30, 1996. No Properties  were sold
during the nine months ended September 30, 1997.

                                        9

<PAGE>



                           PART II. OTHER INFORMATION


Item 1.           Legal Proceedings.  Inapplicable.

Item 2.           Changes in Securities.  Inapplicable.

Item 3.           Defaults upon Senior Securities.  Inapplicable.

Item 4.           Submission of Matters to a Vote of Security Holders.

                  Inapplicable.

Item 5.           Other Information.  Inapplicable.

Item 6.           Exhibits and Reports on Form 8-K.

                  (a)      Exhibits - None.

                  (b)      No reports on Form 8-K were filed  during the quarter
                           ended September 30, 1997.

                                       10

<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

         DATED this 10th day of November, 1997.


                            CNL INCOME FUND XII, LTD.

                            By:      CNL REALTY CORPORATION
                                     General Partner


                                     By:      /s/ James M. Seneff, Jr.
                                              -----------------------------
                                              JAMES M. SENEFF, JR.
                                              Chief Executive Officer
                                              (Principal Executive Officer)


                                     By:      /s/ Robert A. Bourne
                                              ------------------------------
                                              ROBERT A. BOURNE
                                              President and Treasurer
                                              (Principal Financial and
                                              Accounting Officer)